From tiny acquisitions to massive conglomerate combinations, Wall Street's urge to merge remains strong. Some of these deals might generate sought-after synergy, but others could create what Peter Lynch called "diworsification" -- weakening a business's core competency by grafting on wildly unrelated subsidiaries. How can we tell the good deals from the deal breakers?

Breaking down the buildup
To help, we'll turn to the 97,000 investors in Motley Fool CAPS. A combination of two companies with high CAPS ratings might bode well for the new firm's future results, while a highly-rated company that joins a lower-rated one may benefit one set of investors more than the other.

Despite troubles in the capital markets, the deals won't stop; they simply might involve more stock and less cash. Here's a handful of recently announced deals, and the ratings for each participating company on CAPS' five-star scale:

Acquirer

CAPS Rating

Target

CAPS Rating

Deal Price

Navigant Consulting

***

Chicago Partners

NR

$73 million

Blue Coat Systems (Nasdaq: BCSI)

****

Packeteer (Nasdaq: PKTR)

**

$268 million

Avnet

****

Horizon Technology Group

NR

$150 million

Liberty Mutual

NR

Safeco (NYSE: SAF)

***

$6.12 billion

GlaxoSmithKline (NYSE: GSK)

****

Sirtris Pharmaceuticals (Nasdaq: SIRT)

***

$720 million

CAPS ratings courtesy of Motley Fool CAPS; NR = not rated.

A bear of a time
Although there seem to be a greater number of deals pending, in fact the first quarter's $736 billion is the smallest global dollar value amount in six years. The total number of deals is up 14%, to more than 9,100 deals, they're just worth less. The main reason is the 41% decline in U.S. deal values, down to $203 billion, though some of the slack has been made up in both Russia (up 173% to $33 billion) and China (up 43% to $35 billion).

A cavalcade of treatments
There have been a few stumbles over the past year or so when Blue Coat started to bleed red, but the security appliance developer has increasingly focused on wide-area networking (WAN) markets and has seen a number of successful initiatives that are leading to growing revenue. It has also partnered with companies including Symantec (Nasdaq: SYMC) and McAfee to offer antivirus technology, and with Websense to offer content filtering. As Blue Coat likes to say, its proxy gateways police traffic so as to "keep 'good' employees from doing 'bad' things on the Internet."

WAN optimization and Web acceleration combinations are becoming a more crowded field, however. Both F5 and Riverbed (Nasdaq: RVBD) are increasingly shifting their attention to WANs. The addition of Packeteer ought to help Blue Coat fend off those challenges.

Citing Packeteer's own issues, CAPS investor Blindnomore saw the attempt by Elliott Partners to make an unsolicited acquisition as not in the best interest of shareholders, though a Blue Coat bid might be seen as more beneficial.

Unjustly beaten down by the IRS and now the recent target of a hostile takeover by a beneficial owner, [Packeteer] shareholders fend off the hostile bid because they know that the company has much more value than has been showing up in share price. With too many big contracts to count, one with Microsoft as their first networking optimization software for network traffic. BIG.

A value-added offer
What's your take on these deals? At Motley Fool CAPS, your opinion is as valuable as the pros'. Tell the CAPS community whether the urge to merge is good to go -- or whether you think it's better for the firms involved to remain independent.

GlaxoSmithKline is a recommendation of Motley Fool Income Investor. Symantec is an Inside Value pick. Take a free trial subscription to any of the Fool's investment services.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.